Small-cap schemes attract biggest inflows in May

As evidenced by the fact that such schemes gained the biggest share of inflows among equity schemes in May, it remains a popular option for mutual fund investors to invest in small-cap schemes of asset management companies.

The small-cap mutual funds scheme witnessed net inflows of Rs. 3282. In May, 50 crore is a multi-year increase in terms of monthly inflows in such funds, according to data from the Association of Mutual Funds in India AMFI Incidentally.

Even small-cap schemes, such as large-cap, Flexi-cap, and equity-linked savings scheme ELSS, saw net outflows.

equity-based schemes generated net inflows of Rs. 3240 on an overall basis. In May, 30 crore remained largely on account of the inflows in small-cap schemes, indicating that the net flows were primarily on account of the inflows.

The trend is attributed to the fact that there has been a significant downturn in the small-cap industry and now there are numerous good-quality stocks available at attractive valuations.

Major flow in small-cap fund appears based on the call of investors that small-cap funds and stocks have stabilized substantially during the correction and now they believe there is enough value in small-cap stocks. So, they are trying to participate in the upward movement through small-cap funds, said N S Venkatesh, AMFI's chief executive.

For the next 3 - 4 months, I don t see major profit booking happening in small-cap schemes. The money will continue to flow in small-cap schemes, he said.

Small-cap schemes have been in demand over the past few months, according to AMFI data. In April, small-cap investments in India drew inflows of Rs 2,182 million. After a series of losses of Rs. 44 and Rs. 2430 in March, the company said.

This assumes significance as the BSE Smallcap index was down 1.8 per cent in 2022, even as the benchmark S&P BSE Sensex was up nearly 4.5 per cent. The Sensex has risen a little over 3 per cent in the calendar year, while the small-cap barometer has gained almost 8.5 per cent.